Categorized | Lifestyle

How Prepaid Credit Cards Help College Students Control Monthly Spending

Posted on 26 November 2012 oddy88

Although they’re unlikely to be filled with extravagant vacations and fine dining experiences, your college years may nevertheless strain your personal finances. Whether you receive a generous financial aid package from your university or have to foot the bill for your education on your own, you’ll need to make a budget and adhere to it before you develop questionable spending habits.

credit card for students

For several reasons, prepaid credit cards are a crucial spending-control vehicle. Before you head back to school, pick up one of these clever financial products and read on for some tips on how to use your new piece of plastic to control your spending.

Load Less Than You Need

By design, prepaid credit cards don’t encourage the wanton spending that gets so many regular credit card users into trouble. Once you’ve spent the balance on your card, you’re unable to use it again until you load new funds onto it.

student credit card

When you first get your new prepaid card, err on the side of caution and load funds onto the card in relatively small increments. Draw up a budget and determine how much you’ll need to spend each month on essentials like food and school supplies.

Load just that amount onto your card at the beginning of every month and stretch it for the next 30 days.

Check Your Balance

You can’t effectively manage your budget without keeping close tabs on your spending power. Every time you use your prepaid credit card, ask your cashier to run the transaction as “credit” and ask for a copy of your receipt.

student check balance

Note the balance printed on this receipt and adjust your spending plan accordingly. If you’re running out of money for the month and need to dial back your spending, do so before your card is unexpectedly declined due to insufficient funds.

Buy Necessities First

Your spending won’t control itself. If you carry a small load on your prepaid credit card, your purchasing options will be limited by default. Of course, this fact alone may not stop you from making poor spending decisions that could have serious ramifications for your monthly finances.

student buying

Reduce the risk of such slip-ups by using your card solely to purchase necessities until the 20th of every month.

Take Advantage of Rewards Programs

While some prepaid credit cards’ rewards programs are of questionable utility, there are still a few gems out there. For instance, Visa extends its 1-2-3 Rewards program to virtually all of the cards that it issues.

student and credit card

Rewards programs tend to reinforce prudent financial behavior by attaching higher “points” values to everyday expenditures like food, gas and clothing. The quickest path to cash-back payments on prepaid credit cards typically runs through grocery stores and gas stations.

Checking in with your card issuer’s customer support is the best way to understand the reward program attached to your card – for example, if you have a Green Dot Card, contacting them via their Green Dot Customer Service page is the fastest way to get filled in and stay up-to-date.

Resist the Urge to Overload

If you habitually find yourself adding more funds to your card before the month is through, you’re probably using it for too many non-essential purchases. You should strive not to reload your card unless an unforeseen emergency forces you to do so.

college student credit card

If this is difficult, you may have to reorder your budget and cut back on non-essential spending with your card. Otherwise, you may find that you’re running out of money to cover the costs of tuition, rent and other necessities.

While college life can be stressful and sometimes tedious, you’ll eventually look back on your higher education experience with fondness. Make sure you have plenty of good memories upon which to draw by taking these tips to heart and using a prepaid credit card to control your monthly expenditures.

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